Tax exemption for corporate recipients of compensation payments made under the Post Office compensation schemes: Group Litigation Order, Horizon Shortfall Scheme, Suspension Remuneration Review or Post Office Process Review Scheme
This tax information and impact note provides details of the taxation of corporate recipients and the ultimate recipients of compensation payments under the Post Office compensation schemes specified above.
Documents
Details
The measure provides that the ultimate recipient of the compensation, who could be a shareholder, director or employee of a company that was entitled to receive compensation should be taxed in a similar way to an individual who received the compensation directly under one of following compensation schemes:
- the Group Litigation Order Scheme
- the Horizon Shortfall Scheme
- the Suspension Remuneration Review
- Post Office Process Review Scheme
This means that Group Litigation Order recipients should be fully exempt from both corporation tax and income tax on any onward payment of the compensation. The Horizon Shortfall Scheme recipients are exempt at the corporate level, but the onward payment to individual recipient remain taxable to the extent the original source of compensation was taxable. Any amount of the payment which is made to ‘top up’ an increase in the rate of taxation will be exempt from both corporation tax and income tax. The Suspension Remuneration Review compensation paid before 1 January 2024 are exempt a the corporate level, but onward payments to individual recipients remain taxable to the extent that the original source of compensation was taxable. Any amount of the payment which is made to ‘top up’ to resolve an increase in the overall level of taxation will be exempt corporation tax and income tax. Payments under Suspension Remuneration Review made after 1 January 2024 will be exempt at both the corporate level and individual level once the corporate makes. Compensation made under the Post Office Process Review Scheme recipients are exempt from corporation tax and any onward payment to the ultimate recipient is not subject to income tax on the compensation payment.